Plaintiffs Win Battle in High Court on Limitations Issue
A retirement plan participant sued his former employer alleging the employer invested in multiple alternative investments in violation of the Employee Retirement Income Security Act (ERISA). The employer argued the Act’s three-year statute of limitations barred the suit because the investments were included in disclosures to the employees. The employee countered he could not have had actual knowledge because he did not recall reviewing the key disclosures. After ping-ponging up to the nation’s highest court, the justices held that to meet the “actual knowledge” requirement triggering ERISA's three-year limitations period a plaintiff must in fact have become aware of the information, and so a plaintiff does not necessarily have “actual knowledge” of information contained in disclosures that he receives but does not read or cannot recall reading. Employers may close this loophole by providing electronic disclosures and requiring plan participant acknowledgement. A potential bright spot for employers—having to establish disclosure may destroy the common questions of law and fact required for class certification.